Ford Motor Company has confirmed it will not be producing the new Focus Active crossover in the United States, opting to drop the high-riding hatchback altogether from its North American line-up after President Donald Trump imposed higher tariffs on Chinese-made products.
Trump declared victory on Sunday, writing: "This is just the beginning".
"The conclusion was for the iPhone (not now impacted by Tariffs) moving production (100% of final assembly) to the US would need 20% price increases to offset the incremental labor costs", Mohan wrote to analysts on Monday.
"Ford is proud to employ more US hourly workers and build more vehicles in the USA than any other automaker", the company said.
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Ford in April made the shock announcement that by 2020 the only passenger cars in its lineup will be the Mustang and the Focus Active soft-roader based on the recently redesigned fourth-generation Focus. It stopped making Focus sedans at a Wayne, Michigan, plant in May.
With the cancelation of the Focus Active, a Ford spokesman confirms, the Mustang will eventually be the only Ford auto model sold in the U.S.
"Without the tariffs, the business case was pretty solid for that model in the United States market", Kim said. Automakers like to run plants on at least two shifts, and preferably three per day to cover the cost of building and equipping the factory, and to turn a profit.
"This forces Ford to forfeit the sales they would have had if they could continue to import that low-volume niche vehicle", Gabrielsen said. "Even if you had demand and volume, it's still very hard to build a small auto in the USA profitably, which is why you find very few of them here". But disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over limits on US firms' access to Chinese markets, intellectual property protection, technology transfers, and investment. Last week, the technology giant in a letter to the US Trade Representative wrote that the proposed tariffs would impact products like Apple Watch, AirPods, HomePod and it will result in higher prices for US consumers.
For the Focus Active, the tariffs on Chinese vehicles changed everything.
According to CNBC, BofA noted that a 25 percent tariff "could be materially demand destructive" and estimates that about a third of the $26 billion it earns from those products comes from the United States.